Gregory,
$150? Is this a 12 month or 18 month, or...target? In six months
AOL has more than doubled. During that time subscriber growth
seems to be falling off, Compuserve online has accelerated its
subscriber loss and AOL has lost its single best asset, ANS.
AOl was richly priced then. I don't see any fundamentals that
justify the current runup, let alone a projection of another 50%
increase in the face of upcoming general market uncertainty. Today's
"brokerage deal" seems to be the most significant announcement this
year (worth a few points per share).
The point about fundamentals is not meant to suggest that AOL
should fall in the near future, but only meant to suggest that
the farther this stock trades from any fundamentally sound valuation
the more downside risk.
At what price would AOL be outrageously undervalued? Not at 65.
At this point a Merryl Lynch analyst downgraded it a few months
back. Earnings estimates have not gone up. In fact, considering
the five cents per share that AOL has added due to its treatment
of the WCOM deal, there is a good argument to be made that earnings
estimates have gone down. Even Hambricht and Quist, were Steve's
brother works said AOL was expensive at $90.
I don't like the way AOL is treating its shareholders. On Monday while
the stock market is shooting up, AOL is undergoing a strange
distribution pattern. I had never seen so much selling into a rally.
Surely something was up. Then we hear about the block trade -- after, no doubt, the shares have been "scattered" to small investors
left wondering why their AOL is not shooting up along with the
internet sector.
This stock could go up to $150, but then again it could fall to
$30. Investors should realize this. Buying for the long term
based on the "greater fool theory" -- Motley or otherwise is
very dangerous.
Good Luck,
Joe |
